January inflation on investors’ radar this week

MANILA, Philippines — The local stock market’s performance last week was supported by gains on Wall Street, which advanced on the back of less hawkish signals from the US Federal Reserve.

For the week, however, the benchmark Philippine Stock Exchange index (PSEi) corrected slightly lower for the second straight week, down by 24.78 points or 0.3 percent, from the previous week’s decline of 0.1 percent.

Market sentiment was supported by more dovish signals from the US Fed and local monetary authorities, which led to some downward correction in most government and central bank securities auction yields recently, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

The market will continue to be supported by further reopening of the economy toward normalcy, with no more COVID-19 restrictions and no more major lockdowns going forward, he said.

The market’s next resistance targets will be 7,100, which will serve as the next gateway prior to further upside, Ricafort said.

On the other hand, he said the immediate major support levels that help keep the underlying upward momentum intact since Dec. 19, 2022 are from 6,650 to 6,750.

The market is also waiting for specific catalysts this week, including inflation for January, which is set to be released on Feb. 7, as well as the latest gross international reserves level and the local rate setting meeting of the Bangko Sentral ng Pilipinas on Feb. 16.

In the long run, the overall economic recovery, including expansion in manufacturing, will likely drive up earnings per share by 15 percent in 2023, according to The Market Call report published by First Metro Investment Corp. & UA&P Capital Markets Research.

It noted, however, that global uncertainties about inflation and interest rates remain. Thus, investors should still practice selectivity.

The Market Call said that if earnings grow as expected this year, the PSEi should hit 7,500 in 2023.

Corporates have started reporting their earnings results for 2022, reflecting a return to pre-pandemic numbers. More companies are expected to report their 2022 results this week.